TMI Blog2014 (10) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed in is also invalid - the AO without allowing an opportunity to assessee to cross examine Sri S. Venkateswara Rao was not correct in making the addition by relying upon the statement of Sri S. Venkateswara Rao - The AO having not brought any other corroborative evidence on record to establish that assessee had actually received the sale consideration, the computation of short term capital gains made by him cannot be sustained. Unexplained investment in purchase of property – Held that:- It is not justified in considering the fact that assessee has explained the source of such investment by producing necessary evidence - assessee at the time of assessment proceedings as well as before the CIT(A) had stated that the amount of ₹ 3 lakhs was received from her uncle who is an agriculturist and she has also filed a confirmation in support of such claim - it is not understood what more supporting evidence assessee could have produced in support of her claim - When assessee has explained her source by producing evidence in the form of confirmation it is duty of the Departmental authorities to make enquiry and ascertain whether assessee's claim is correct or not - assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the seized material marked Annexure A/DNR/18 dated 29.10.2007 is an account in the name of Sri S. Venkateswara Rao alias Venkatesh which reflected certain payments towards purchase of plots. When Sri D. Nagarjuna Rao who is the partner of M/s. Sitaramanjaneya Constructions was confronted with the aforesaid seized material, he stated that the entries in seized document were made in his own handwriting and they reflected the payments made by him to Sri Venkatesh towards purchase of certain properties. Further, Sri D. Nagarjuna Rao stated that they had purchased the property being plot No. 22 at Sy. No. 230 pertaining to the present assessee, Smt. S. Madhavi through Sri Venkatesh and have paid an amount of ₹ 37.80,000 towards sale consideration. In this connection, the Assessing Officer also examined assessee and her husband Sri S.K. Visweswara Rao, who out rightly denied of having received the sale consideration of ₹ 37,80,000. Further, the Assessing Officer noted that M/s. Sitaramanjaneya Constructions subsequently sold the very same property to Sri P. Gangadhara Rao for a recorded consideration of ₹ 14,70,000 though the actual sale consideration which passed bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to ₹ 29,40,300. So far as the addition of ₹ 6,78,000 as unexplained investment u/s. 69 of the Act, the CIT(A) after considering submissions of assessee accepted assessee's explanation for an amount of ₹ 3,78,000 and confirmed the addition of ₹ 3 lakhs. 7. The learned AR submitted before us that assessment made u/s. 153C of the Act is invalid as the condition precedent for initiating the proceedings u/s. 153C is not satisfied. The learned AR referring to the seized document i.e., page No. 55 of Annexure A/DNR/18 submitted, the seized document neither has any reference to assessee nor to the property of the assessee. Further, it was seized from a third party. Therefore, the said seized document cannot be considered to be belonging to assessee as envisaged u/s. 153C of the Act. The learned AR submitted that such seized document is not in the nature of books of account, money, bullion or jewellery belonging to assessee. As per the language of section 153C, the Assessing Officer should not have recorded satisfaction for initiating the proceedings u/s. 153C of the Act. Therefore, the AO having no jurisdiction to initiate proceedings u/s. 153C, the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the amount was paid by the purchaser to Sri S. Venkateswara Rao. Therefore, if at all any on-money has been paid assessee was not in aware of the same and it might have been paid to Sri S. Venkateswara Rao, the mediator. It was submitted that there being no clear cut evidence to conclusively prove that assessee had received the amount of ₹ 37,80,000 from the purchaser, the addition made on account of short term capital gains is not justified. So far as the addition made on account of unexplained investment is concerned, the learned AR again reiterated the submissions made before the CIT(A). 10. The learned DR, on the other hand, strongly supporting the order of the CIT(A) submitted that since the seized document has a direct nexus with the sale transaction entered between assessee and M/s. Sitaramanjaneya Constructions there cannot be any doubt with regard to the validity of proceedings initiated u/s. 153C of the Act. The learned DR submitted, the purchaser of the property as well as the mediator having admitted the sale consideration being paid to assessee, assessee's claim that she has not received more than what is recorded in the registered sale deed is unaccepta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has initiated the proceedings u/s. 153C of the Act is page 55 of Annexure A/DNR/18. A reference to the seized material, a copy of which is at page 75 of the Paper Book, indicates that the same is an account relating to Sri S. Venkateswara Rao in which certain payments have been recorded. Admittedly, the said seized material was not seized from assessee but from Sri D. Nagarjuna Rao in whose case search and seizure operation was conducted u/s. 132. Further, seized material has neither any reference to the assessee, even remotely, nor to the property sold by her. That being the case, the seized material cannot be said to be belonging to assessee. Hence the pre-condition for initiating proceedings u/s. 153C is not satisfied. In this context we refer to the decision of the co-ordinate Bench in the case of M/s. Shouri Constructions and T. Jaipal Reddy in ITA Nos. 2056 and 2057/Hyd/2011 dated 28.6.2013 wherein the co-ordinate Bench while following the decision of the Hon'ble Gujarat High Court in the case of Vijaybhai N. Chandrani vs. ACIT (333 ITR 436) and some other orders of the Tribunal held as follows: 10. Thus the condition precedent for assumption of jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment under section 153A. Section 153C which is similarly worded to section 158BD of the Act, provides that where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing. or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A he shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person. However, there is a distinction between the two provisions inasmuch as under section 153C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under section 158BD if the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he shall proceed against such other person under section 158BC. 13. Thus a condition precedent for issuing notice under section 153C and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notes both the complete ownership and limited ownership of interest. Of course belonging to is capable connoting, interest, which is less than absolute perfect legal title. However, there should be some limited ownership of interest, if it is to be permitted that the assets belongs to the assessee. In the instant case, documents or books of account found during the course of search and seized cannot be termed, to be indicating any limited interest of the ownership of the assessee in such books of account or documents. The language used in section 153C is materially different from the language used under section 158BD. As per section 158BD, if any undisclosed income relates to other person, then action against such other person can be taken provided such undisclosed income is referable to the document seized during the course of search. However, section 153C says that if valuable or books of account or documents belonging to other persons are seized then action under section 153C can be taken against that person. In the instant case, we are satisfied that books of account or documents do not belong to the assessee and, therefore, the Assessing Officer was not justified in init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized document show certain cheque payments. However, no effort or enquiry has been made by the Assessing Officer to ascertain in whose favour the cheques were drawn and who had encashed them. Further, the total amount as per the seized document is ₹ 96.80 lakhs whereas the payment admittedly made to assessee is ₹ 37.80 lakhs. Therefore, the other amount mentioned in the seized document relates to whom or to which transaction, has not been verified. In these circumstances, without making any enquiry to establish the nexus between the payment referred to in the seized document and the amount stated to have been received by assessee it cannot be said that assessee has received sale consideration of ₹ 37.80 lakhs. As we have already mentioned, at no point of time the assessee has an occasion to deal directly with the purchaser M/s. Sitaramanjaneya Constructions. It was Sri S. Venkateswara Rao who was acting as a mediator between assessee and the purchaser. In fact, assessee's compliance dated 22.12.2009 before AO clearly show that Sri S. Venkateswara Rao has paid an amount of ₹ 7,05,000 through cheques to assessee much prior to payment made by M/s. Sit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
